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1 Chapter Information Systems in Global Business Today

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LEARNING OBJECTIVES Management Information Systems Chapter 1 Information Systems in Global Business Today Understanding the effects of information systems on business and their relationship to globalization. Explain why information systems are so essential in business today. Define an information system and describe its management, organization, and technology components.

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Define complementary assets and explain how they ensure that information systems provide genuine value to an organization. Describe the different academic disciplines used to study information systems and explain how each contributes to our understanding of them. Explain what is meant by a sociotechnical systems perspective. LEARNING OBJECTIVES (Continued) Management Information Systems Chapter 1 Information Systems in Global Business Today

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NBA Teams Make a Slam Dunk with Information Technology Problem: Lack of hard data usable in decision-making processes, costly and competitive market. Solutions: Developed a new system designed to collect and organize data using video clips of games. Synergy Sports Technology tags video of each game with hundreds of descriptive categories and allows coaches and players to stream game footage from the Web. Demonstrates IT’s role in innovation and improving business processes. Illustrates how the Web has allowed businesses to use new tools to analyze critical data. Management Information Systems Chapter 1 Information Systems in Global Business Today

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The Role of Information Systems in Business Today How information systems are transforming business Increase in wireless technology use, Web sites Shifts in media and advertising New federal security and accounting laws Globalization opportunities Internet has drastically reduced costs of operating on global scale Presents both challenges and opportunities Management Information Systems Chapter 1 Information Systems in Global Business Today

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Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today Information Technology Capital Investment Figure 1-1 Information technology investment, defined as hardware, software, and communications equipment, grew from 32% to 51% between 1980 and 2008. Source : Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts , 2008.

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In the emerging, fully digital firm Significant business relationships are digitally enabled and mediated Core business processes are accomplished through digital networks Key corporate assets are managed digitally Digital firms offer greater flexibility in organization and management Time shifting, space shifting Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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Read the Interactive Session and then discuss the following questions: What are the advantages of using videoconferencing technologies? What are the disadvantages? What is telepresence and what sorts of companies are best suited to use it as a communications tool? What kinds of companies could benefit from using videoconferencing? Are there any companies that might not derive any benefits from this technology? Virtual Meetings: Smart Management The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today

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Growing interdependence between ability to use information technology and ability to implement corporate strategies and achieve corporate goals Business firms invest heavily in information systems to achieve six strategic business objectives: Operational excellence New products, services, and business models Customer and supplier intimacy Improved decision making Competitive advantage Survival Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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Operational excellence: Improvement of efficiency to attain higher profitability Information systems, technology an important tool in achieving greater efficiency and productivity Wal-Mart’s RetailLink system links suppliers to stores for superior replenishment system Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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New products, services, and business models : Business model: describes how company produces, delivers, and sells product or service to create wealth Information systems and technology a major enabling tool for new products, services, business models Examples: Apple’s iPod, iTunes, and iPhone, Netflix’s Internet-based DVD rentals Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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Customer and supplier intimacy: Serving customers well leads to customers returning, which raises revenues and profits Example: High-end hotels that use computers to track customer preferences and use to monitor and customize environment Intimacy with suppliers allows them to provide vital inputs, which lowers costs Example: J.C.Penney’s information system which links sales records to contract manufacturer Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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Operational excellence: Improvement of efficiency to attain higher profitability New products, services, and business models: Enabled by technology Customer and supplier intimacy: Serving customers raises revenues and profits Better communication with suppliers lowers costs Improved decision making More accurate data leads to better decisions Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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Competitive advantage Delivering better performance Charging less for superior products Responding to customers and suppliers in real time Example: Toyota and TPS (Toyota Production System) enjoy a considerable advantage over competitors – information systems are critical to the implementation of TPS Management Information Systems Chapter 1 Information Systems in Global Business Today The Role of Information Systems in Business Today

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The Role of Information Systems in Business Today Management Information Systems Chapter 1 Information Systems in Global Business Today The Interdependence Between Organizations and Information Technology In contemporary systems there is a growing interdependence between a firm’s information systems and its business capabilities. Changes in strategy, rules, and business processes increasingly require changes in hardware, software, databases, and telecommunications. Often, what the organization would like to do depends on what its systems will permit it to do. Figure 1-2

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Raw data from a supermarket checkout counter can be processed and organized to produce meaningful information, such as the total unit sales of dish detergent or the total sales revenue from dish detergent for a specific store or sales territory. Figure 1-3 Data and Information

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Feedback : Output returned to appropriate members of organization to help evaluate or correct input stage Computer/Computer program vs. information system Computers and software are technical foundation and tools, similar to the material and tools used to build a house Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information organizations need. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems. Figure 1-4 Functions of an Information System

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Using information systems effectively requires an understanding of the organization, management, and information technology shaping the systems. An information system creates value for the firm as an organizational and management solution to challenges posed by the environment. Figure 1-5 Information Systems Are More Than Computers

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Business organizations are hierarchies consisting of three principal levels: senior management, middle management, and operational management. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management. Figure 1-6 Levels in a Firm

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Management dimension of information systems Managers set organizational strategy for responding to business challenges In addition, managers must act creatively: Creation of new products and services Occasionally re-creating the organization Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Technology dimension of information systems Computer hardware and software Data management technology Networking and telecommunications technology Networks, the Internet, intranets and extranets, World Wide Web IT infrastructure: provides platform that system is built on Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Read the Interactive Session: Technology, and then discuss the following questions: What are the inputs, processing, and outputs of UPS’s package tracking system? What technologies are used by UPS? How are these technologies related to UPS’s business strategy? What problems do UPS’s information systems solve? What would happen if these systems were not available? UPS Competes Globally with Information Technology Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Business information value chain Raw data acquired and transformed through stages that add value to that information Value of information system determined in part by extent to which it leads to better decisions, greater efficiency, and higher profits Business perspective : Calls attention to organizational and managerial nature of information systems Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and, ultimately, increase firm profitability. Figure 1-7 The Business Information Value Chain

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Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today Although, on average, investments in information technology produce returns far above those returned by other investments, there is considerable variation across firms. Figure 1-8 Variation in Returns on Information Technology Investment

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Investing in information technology does not guarantee good returns Considerable variation in the returns firms receive from systems investments Factors: Adopting the right business model Investing in complementary assets (organizational and management capital) Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Complementary assets: Assets required to derive value from a primary investment Firms supporting technology investments with investment in complementary assets receive superior returns E.g.: invest in technology and the people to make it work properly Perspectives on Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today

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Contemporary Approaches to Information Systems Management Information Systems Chapter 1 Information Systems in Global Business Today In a sociotechnical perspective, the performance of a system is optimized when both the technology and the organization mutually adjust to one another until a satisfactory fit is obtained. Figure 1-10 A Sociotechnical Perspective on Information Systems